President Joe Biden’s 2025 budget blueprint, although unlikely to become law, offers a glimpse into the potential fiscal landscape should he win reelection and Democrats gain control of Congress. Middle-class Americans, already grappling with rising prices triggered by Bidenomics, should brace for more of the same. The budget, unveiled in March, calls for record-breaking spending, leading to soaring debt and trillion-dollar deficits becoming the new norm. This would occur despite billions in higher taxes.
The president has pledged not to increase taxes on those earning less than $400,000 annually. However, his efforts to elevate corporate rates would effectively separate all Americans from more of their hard-earned money. Biden’s plan appears to be inspired by Sen. Bernie Sanders’ approach: targeting capitalists. He aims to increase the U.S. corporate tax rate by one-third, to 28%, and proposes a 40% rise in the corporate alternative minimum tax.
Impact on Consumers and Investors
This strategy resonates well in populist and progressive circles, where economic literacy is often lacking. However, corporations don’t pay taxes; they collect them from consumers who purchase their goods and services. As economist and former U.S. Senator Phil Gramm and policy-metrics advisor Mike Solon noted in a Wall Street Journal op-ed, “When the corporate tax rate increases, corporations try to pass the cost on to consumers.” If the entire cost of the tax increase cannot be passed on, employees and investors bear the burden.
Who are these investors? According to TaxNotes, 72% of the value of all domestically held stocks is owned by pension plans, 401(k)s, individual retirement accounts, charitable organizations, or life insurance companies. These are vehicles upon which many average workers depend for their long-term benefit. Gramm and Solon cite a Treasury study indicating that nearly half of all U.S. families pay more in corporate taxes than they do in individual income taxes. This suggests that Biden’s corporate tax plan would cost low- and middle-income Americans more money than if Congress raised their income tax rates.
Cyprus: A Tax Haven for Businesses
In contrast to the U.S., Cyprus offers a more favorable tax environment for businesses. The cyprus corporate tax rate stands at a competitive 12.5%, making it an attractive destination for companies seeking tax efficiency. The cyprus business tax framework provides numerous advantages, including exemptions on dividends and capital gains under certain conditions.
Moreover, the cyprus tax advantages extend beyond just low rates. The island nation boasts an extensive network of double tax treaties, reducing the risk of double taxation for international businesses. This makes tax cyprus company setups particularly appealing for multinational corporations looking to optimize their tax liabilities.
As Republicans gear up for the upcoming campaign, they might emphasize these economic realities and highlight how Biden’s corporate tax proposals could further strain American families already struggling with inflation — inflation that Biden did not foresee.
